9/30/2009 @ 6:36PM

So Long, Saturn

General Motors said Wednesday it would wind down its Saturn brand after
Penske Automotive Group
abruptly called off negotiations to buy the unit.

Penske pulled the plug because it couldn’t secure future products for Saturn showrooms beyond 2011, when GM is scheduled to stop producing Saturns.

Although it had negotiated a supply agreement with another manufacturer, the deal was rejected by that manufacturer’s board of directors, Penske said in a statement. “Without that agreement, the company has determined that the risks and uncertainties related to the availability of future products prohibit the company from moving forward with this transaction.”

Penske did not identify the manufacturer, but press reports last spring said Penske was in talks with
Renault
subsidiary Renault Samsung Motors of Korea to bring small cars to the U.S. and rebrand them as Saturns. Several Chinese manufacturers had also been mentioned as potential manufacturing partners.

The news stunned both GM and Saturn’s 350 dealers, who had believed the deal was within days of being completed. “This is very disappointing news and comes after months of hard work by hundreds of dedicated employees and Saturn retailers who tried to make the new Saturn a reality,” GM Chief Executive Frederick A. “Fritz” Henderson said in a statement.

When GM and Penske struck an initial agreement in June, the automaker said the deal would save 13,000 jobs.

“For the first time in my life, I’m speechless,” said Wisconsin and Illinois Saturn dealer Thomas Zimbrick, who was looking forward to hearing about his brand’s future in a series of dealer meetings next week with Penske Chief Executive Roger Penske and Saturn general manager Jill Lajdziak. “In a word, I’m stunned,” said Zimbrick.

Saturn offered Penske, run by auto-racing legend Roger Penske, the chance to add to its auto dealership network with stronger control over the product sold.

“The Saturn dealership network represented a unique opportunity for Penske,” said Jeremy Anwyl, chief executive of researcher Edmunds.com. “The risk was sourcing product and that proved to be too much to overcome to complete the deal.”

GM said it would wind down the Saturn brand and dealership network, in accordance with contracts that Saturn dealers recently signed with GM. During that process, customers can still purchase and have their vehicles serviced at Saturn retailers. GM did not say how long that would take. Once the wind down is complete, Saturn owners can have their vehicles serviced at other GM dealerships.

Saturn was conceived by GM in 1985 as “a different kind of car company” that would specialize in small, affordable, high-quality autos that would compete with the likes of
Toyota
and
Honda
. The brand promoted a no-haggle pricing policy and had a dedicated factory in Spring Hill, Tenn.

Though Saturn was moderately successful in luring buyers who typically favored Japanese nameplates, the brand never lived up to expectations because it couldn’t compete for a big enough share of GM’s limited financial and creative resources.

Today, Saturn has only three core models, the midsize Aura sedan and two crossovers, the Outlook and the Vue. Saturn sales dropped 58% through August. The Spring Hill plant is scheduled to close, while the current Saturn lineup is built in Kansas, Michigan and Mexico. Analysts estimate GM lost $20 billion on its failed Saturn experiment.

Saturn is merely the latest GM brand to die as the company struggles to recover from bankruptcy. It is killing Pontiac and is in the process of trying to sell Saab and Hummer. Earlier this decade, it killed Oldsmobile.